Benefits of increasing use of cloud managed services

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Benefits cloud managed servicesThis is the second part in a two-part interview series with Lynda Stadtmueller, vice president of cloud services for the analyst firm Frost & Sullivan. In part one, we discussed why 80 percent of US companies plan to increase their use of cloud managed services. Today, she offers perspective on the benefits that cloud managed services can deliver.

Thoughts on Cloud (ToC): Based on your experience, what are the biggest benefits for a company when moving to a managed cloud environment or increasing its use of cloud managed services?

Lynda Stadtmueller, vice president of cloud services, Frost & Sullivan: The primary benefits are increased application performance, improved efficiency in infrastructure utilization and faster speed to market.

But another benefit that might be surprising is that managed services can help manage costs. When I work with enterprises to create a total-cost-of-ownership (TCO) analysis, we often find that managed services can pay for themselves when compared to on-premises deployment and management of some applications, or even with a “do-it-yourself” approach.

In my last survey, 45 percent of businesses using a “do-it-yourself” approach to cloud — meaning they are deploying their own infrastructure as a service — said that for every dollar they spend on the infrastructure itself, they spend three to five dollars managing it. That’s a huge amount. If you’re using a managed service provider, you can offload a lot of that internal cost.

ToC: Do cloud managed services tend to deliver more benefits for large enterprises?

LS: I’m actually seeing more growth in the midmarket. My personal theory is that midmarket chief information officers (CIOs) often come from large enterprises, which means that they recognize the value of technology for making the company more competitive and increasing revenue.

Midmarket businesses are less willing to spend on “break-fix” types of managed services. They want more value. So I’m seeing higher cloud managed services adoption rates in the midmarket segment because they need those to compete, and they see the value these services can provide.

ToC: What’s the number one recommendation you make to clients that are considering moving to cloud managed services?

LS: When we look at what chief executive officers demand from IT, it’s not just about reduced costs. It’s also about making the business run faster and raising productivity. Because of that, I encourage CIOs to do a TCO analysis that includes more than the top-line expenses.

The cost of downtime is a good example. If you have a managed services partner with availability service level agreements (SLAs) and a tested backup and recovery plan, you can quantify the cost savings for lack of downtime.

When businesses can use dollar figures to quantify the workloads across the entire enterprise that are going to your managed service provider, it helps the CIO better understand the value they’re driving for the company. It also helps them speak in a language that their business colleagues understand.

ToC: If companies choose not to use cloud managed services, what’s the alternative for taking advantage of the benefits of cloud?

LS: Our 2016 study on cloud-based managed services found that 91 percent of businesses hire somebody to do something, but it’s not necessarily managed services. Instead, it might be services to help design and implement a cloud strategy.

But problems can arise when companies forget about applications after they’re launched. Costs start increasing because there’s nobody to keep things running efficiently. The people who uploaded the workload are off doing the next piece of technology and nobody’s minding the store.

To estimate your annual savings from implementing cloud managed services, try the Cost Benefits Estimator.

IBM Cloud Managed Services Global Portfolio Manager

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